This is the final installment of a 6 part series on transformation leadership.  In part 1 of this series, I laid out five great New Year’s resolutions for Executives in 2013.  In this post, I offer some practical suggestions for Resolution #5: If it’s broken, fix it now.

Some years ago, I was working with a company that decided to make a $90M, multi-year investment in advanced automation and information technologies for producing specialty pipes and cables.  Several months into the planning process, it became clear that the entire program was at risk of failing before the first capital project was even launched.  It wasn’t a technical problem — or even a financial problem.  The problem was a management problem — at the highest level of the organization.  The Vice President of Manufacturing simply would not or could not change his approach to managing the manufacturing process on a day-to-day basis — even though he had endorsed the strategy before the company’s Board of Directors.

Of course, this should not have come as a huge surprise to the rest of the management team.  The VP of Manufacturing had been in his position longer than any of the other executives, including the President of the company.  He had established a reputation for being very knowledgeable — but also very inflexible — long before this change in strategic direction.  Unfortunately for the President, all of the resources that were required to implement the strategy “belonged” to the VP of Manufacturing.    Without the full commitment of the VP of Manufacturing, the new strategy was destined to fail before it even started.

These imbalances in organizational power are not uncommon, whether they are the result of one very strong individual leader, a cultural history of giving one part of the organization more power than the others, or simply the nature of the industry itself.  Some companies, such as those in the CPG industry, are dominated by the product development, marketing, or sales organizations.  Other companies, like those in the high tech industry or the construction industry, are dominated by the engineering team.   Not only is this normal, it may be perfectly appropriate to the overall business strategy.  The problem arises when the dominant organization or individual is not aligned with the overall strategy.  Equally challenging is having a support group, like finance procurement, legal, or IT, suddenly emerge as a controlling force in the organization.

Theses imbalances can eventually lead to outright hostility within the organization, with power struggles, infighting, and dissention becoming the rule rather than the exception.  And the longer it lasts, the more it will cost you in time, energy, performance, and profitability.

Changing this dynamic may mean making significant changes to the organization.

Break down the functional barriers

In larger organizations, functional “silos” can be a major impediment to a change initiative.  One of the classic battles is between sales and operations.  The sales organization is tuned to the marketplace and seeks to be able to meet the rapidly changing demands of the customer. Manufacturing or operations is tuned to controlling costs and seeks to reduce the number of changes, options, or variations in order to be more efficient.  In a healthy, well-managed company, both of these organizations will be aligned with the overall strategy, communications will be frequent and constructive, and there will be a healthy mutual-respect between the organizations. So, what can you do to create this healthy, well-managed collaboration between your sales and operations teams?

First, if you don’t already have a sales and operations planning (S&OP) process that includes both sales and operations participation, you need to create one.  Manufacturing needs to be at the table when new products or promotions are discussed, so that they can raise any issues before it reaches the factory floor.  Conversely, sales should be at the table when capital budget priorities are set, so that the planned spending aligns with customer needs.

Another great strategy for improving communications — and mutual respect – between organizations is to make sure that your employee development program rotates your top talent through these different organizations.  Sales and product leadership should “walk in the shoes” of operations at least once during their early careers.  And operations leadership should be exposed to direct customer interaction at least once, as well.  The more well-rounded the experience of your team, the more likely they will be able to collaborate and communicate for the benefit of the entire organization.

A more dramatic approach is to completely restructure the organization.  One tactic is to break the larger organization down into more self-contained business units.  For example, instead of having all of your manufacturing facilities managed as one large cost center, align the facilities with various product groups.  And, while you are it, reshuffle the management deck to create some fresh thinking.  While this may create some disruption in the short term, the longer term benefit of breaking down the old silos to promote collaboration should more than offset the short-term costs.

Bring in New Blood

When reshuffling your existing managers does not do the trick, you may want to consider bringing in some new talent.  This is particularly effective when you are launching a major change initiative, such as lean manufacturing or an ERP implementation.  And, I am not talking about just hiring or training a few subject matter experts, which is what most organizations will do.  I am talking about changing some of the key leadership in the organization, as well, so that the new skills and new way of thinking about the business are fully integrated with day-to-day decision making.

Eliminate the Dead Wood

In order to make room for the new blood, you may also need to eliminate some folks from the organizational mix.  Resistance to change, either active or passive, can occur at any level in the organization.  When it occurs at the top, such as the case of the VP of Manufacturing I discussed in the beginning of the article, removal of that person can send a very strong message to the entire organization that you are serious about your vision.  But even when it occurs at the bottom of the organization, it is equally important to act quickly.  If people see that they do not have to change their behaviors in order to keep their jobs, they simply won’t change.  What started off as one or two people who did not want to change, soon becomes dozens or hundreds.  In short, if people are not willing to change, then you need to change out the people.

The Role of Training

Before someone complains that I have not discussed the importance of training as part of a transformation process, let me say this.  Training is essential, whether you make any of these other organizational or management changes.  You need to provide employees with the information and tools they need to embrace any new process, be it lean manufacturing, quality management, or using a new ERP system.  But unless you quickly deal with the dysfunctional parts of your organization, much of the value of the initial training will be lost as the transformation slows down.  You may find yourself repeating the initial training multiple times, rather than moving to more advanced skills as your organization begins to transform.  And no amount of training will “fix” the employees or managers who are never going to get on board with the transformation.

Making the Tough Decisions

To finish my opening story, the President of the company was faced with a difficult choice.  He could keep the VP of Manufacturing and try to convince him to get on board.  He could bring someone in over the VP of Manufacturing to provide the leadership.  He could cut the VP of Manufacturing loose after 35 years with the company.  Or, he could abandon the new vision and save $90 million.  For him, the choice was simple.  The VP of Manufacturing, despite his years of service, simply did not provide enough value to outweigh the benefits of an empowered operations team, working together to position the company for the next century.  He was gone within the week and the transformation began to move forward again.

Dealing with the organizational change process is the single most challenging part of any transformation.  Anyone can define a new strategy, make a big announcement, and invest in the systems and training that support a new initiative.  But only the best managers and leaders are able to create a new reality by making the tough organizational decisions before it is too late.

Resolve to make 2013 your “Year of Action” and if it is broken, fix it now!